What this ETF is trying to do

The First Trust Institutional Preferred Securities and Income ETF (FPEI) is designed to provide investors with income through preferred securities. Preferred securities are a type of investment that usually pays a fixed dividend, sitting somewhere between a stock and a bond.

What the numbers show

As of October 9, 2026, the share price of FPEI was $18.54. To understand how the fund has performed, we look at two different types of returns: price return (the change in share price) and total return (which includes the distributions paid to investors).

• Year-to-Date (YTD): The price return is -4.38%, while the total return is -0.14%.

• One Year: The price return is -4.21%, but the total return is 1.54%.

• Three Year: The price return is 11.15%, and the total return is 31.93%.

• Five Year: The total return is 18.86%.

An estimated price from roughly one year ago was $19.36.

Income and distribution explanation

FPEI is focused on providing regular cash payments. It usually pays distributions monthly, with 12 payments made over the last year. The trailing distributions totaled $1.12 per share, resulting in a distribution yield of approximately 6.04%.

It is important for beginners to remember that a high distribution yield alone can be misleading. It tells you how much cash the fund is paying out relative to the price, but it does not guarantee that the overall investment is growing.

NAV erosion explanation

NAV erosion happens when the actual value of the assets inside a fund drops over time. The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, we can look at price-based evidence. FPEI has an erosion-risk score of 94, which is labeled as "Stable / sideways" with "good" severity. Additionally, the severe erosion-risk flag is false, meaning the fund's price trend did not trigger a high-risk warning.

Pros

• Consistent Income: The fund provides monthly distributions.

• Positive Long-Term Total Return: Over three and five years, the total return has been positive.

• Stability: The erosion-risk score suggests the price has remained relatively stable or moved sideways.

Cons

• Recent Price Decline: Both the year-to-date and one-year price returns are negative.

• Price vs. Total Return Gap: In the short term, the share price has fallen, and the total return is only positive because of the distributions.

Beginner takeaway

FPEI is an income-focused ETF. While the share price has declined slightly over the last year, the total return remained positive because of the monthly distributions. This shows that for income investors, the cash payments can sometimes offset a falling share price, though they do not guarantee the principal investment will stay the same.